O’Malley says he would like sales tax increase

ANNAPOLIS — Gov. Martin O’Malley said Wednesday he would prefer to raise the state’s sales tax instead of the one on gas to address the budget deficit and pay for road and highway repairs, but noted that revenue proposals are quickly changing.

O’Malley said he believes an increase in the sales tax from 5 percent to 6 percent in a 2007 special session enabled Maryland to do things other states couldn’t during the recession. He said he would prefer raise it again from 6 percent to 7 percent.

“Frankly, if I had my druthers, I’d rather do the one penny on the sales tax,” the Democrat said. “It gives us flexibility — have that address our operating needs and then transition that into the sort of revenue stream that then allows us to do greater bonding capacity for the transportation. That’s what I’d like to do.”

O’Malley made the remarks during an interview with WEAA-FM’s Marc Steiner on the first day of the state’s 90-day legislative session.

Tax proposals will be a centerpiece of a legislative session that is expected to be challenging, because the state faces a $1.1 billion budget deficit. O’Malley has been talking for months about ways to raise money for transportation needs and sewer improvements and to fight pollution.

A state commission last year recommended the state raise the 23.5-cent gas tax by 5 cents a year for three years. It would raise about $490 million a year after fully implemented. After that, the tax would be indexed to the Construction Cost Index to keep up with inflation. Maryland hasn’t raised its gas tax since 1992.

Still, with a week to go before O’Malley submits the state budget to the General Assembly, the governor has yet to say what his revenue proposals will be.

“We’ll be rolling these proposals out over the next few days,” O’Malley said.

Miller said he believed he would be able to get a gas tax measure through his chamber.

O’Malley also is weighing an increase in the state’s “flush tax,” an annual $30 fee on sewer bills to maintain sewage treatment upgrades.

‘It’s got to change’

Lawmakers were scheduled to convene at noon for a busy session that will include an effort to legalize gay marriage. Miller said he believes the bill will pass the Senate again this year, but questions remain in the House of Delegates, where it stalled last year. O’Malley has pledged to make the legislation a priority of his this session.

Miller and House Speaker Michael Busch, D-Anne Arundel, spoke on the radio program before O’Malley. Miller said he criticized the governor Tuesday night for announcing plans for $370 million in school construction funding, without linking the large amount to changes in how Maryland pays teacher pension costs and requiring counties to maintain certain amounts of local spending on K-12 education.

Maryland is one of the few states in the nation that pays for all teacher pension costs. Miller said pensions are a billion-dollar cost to the state with no funding source and the cost has increased by 35 percent in the last five years.

“It’s got to change,” he said.

Busch also was critical of some counties for not spending as much money as they’re supposed to under the state’s maintenance of effort rules.

“There is no excuse for counties, under the system that we have, not to make the appropriate contribution to their K-12 education,” Busch said.

Miller also said he did not believe a proposal to raise taxes on cigars that has the backing of health advocacy groups would pass his chamber.

“I think it’s eliminating something they don’t like rather than sound tax policy,” Miller said. “It raises a miniscule amount of money, and I don’t think the juice is worth the squeeze.”